Acquisition of PARK TOWER Sacramento, California 12 February 2020 1
Important Notice This document may contain forward-looking statements that involve assumptions, risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in operating expenses, governmental and public policy changes, and the continued availability of financing in the amounts and terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of management on future events. The value of units in Prime US REIT (the “Units”) and the income derived from them may fall as well as rise. U nits are not obligations of, deposits in, or guaranteed by, the Manager, DBS Trustee Limited (as trustee of Prime US REIT) or any of their affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Holders of Units (the “Unitholder”) have no right to request the Manager to redeem or purchase their Units while the Units are listed. It is intended that Unitholders may only deal in their Units through trading on Singapore Exchange Securities Trading Limited (the “SGX - ST”). Listing of the Units on the SGX -ST does not guarantee a liquid market for the Units. This document is not to be distributed or circulated outside of Singapore. Any failure to comply with this restriction may constitute a violation of United State securities laws or the laws of any other jurisdiction. The past performance of Prime US REIT is not necessarily indicative of its future performance. DBS Bank Ltd. was the sole financial adviser and issue manager for the initial public offering (“IPO”) of Prime US REIT (the “Offering”). DBS Bank Ltd., Merrill Lynch (Singapore) Pte. Ltd., China International Capital Corporation (Singapore) Pte. Limited, Credit Suisse (Singapore) Limited, Maybank Kim Eng Securities Pte. Ltd. and Oversea-Chinese Banking Corporation Limited were the joint bookrunners and underwriters for the Offering. 2
Contents Overview of Park Tower 4 ▪ Rationale and Key Benefits of the Acquisition 6 ▪ Conclusion 17 ▪ Appendix 19 ▪ 3
Overview of Park Tower Lobby, Park Tower
Maiden Acquisition of Park Tower, Sacramento Description 24-storey Class A office tower and 5-storey mixed use retail/parking Class A garage Location 980 9th St and 1010 8th St, Sacramento, California Prime CBD Land Tenure Freehold Location NLA 489,171 sq ft Parking Lots 1,157 (2.4/1,000 sq ft) 92.2% 1 Valuation 2 US$170.0 million Occupancy Purchase Price 3 US$165.5 million FY19 NPI Yield 4 6.9% GOLD LEED WALE by NLA 5.6 years Status Tenants 43 Note: Data as at 1 January 2020 (1) Committed occupancy as at 1 January 2020, assumes (i) building amenities of 9,609 sq ft are on a leased basis, (ii) lease with California Public Radio for 8,196 sq ft, which was signed on 30 January 2020, was in place as at 1 January 2020, and (iii) non-leasable static vacancy of 28,194 sq ft in the basement is excluded 5 (2) Based on valuation as at January 2020 by Joseph Blake & Associates, an independent 3rd party appraiser. (3) Subject to closing and post-closing adjustments in the ordinary course of business (4) Based on annualised cash NPI for FY2019 of US$11.5 million and purchase consideration of US$165.5 million
Rationale and Key Benefits of the Acquisition CBD, Sacramento
Rationale and Key Benefits of the Acquisition 1 Exposure to California’s Capital, Sacramento 2 Class A Tower with World Class Amenities located in a PRIME location Enhanced Portfolio Diversification 3 4 Provides Resilience and Growth to PRIME’s Portfolio 5 Accretive Acquisition Enhances Unitholders’ Return 7
Exposure to California’s Capital, Sacramento Expanding Economy Average Gross Metropolitan Product annual growth ▪ rate of 3.2% vs U.S. average of 2.3 % (2013 – 2018) Significant in-migration and population growth trends ▪ Growing Population Abundant and highly-educated workforce due to ▪ Highly Educated presence of world-renowned institutions Workforce Government employment makes up about 22% of the ▪ Strong Government region’s employment providing economic stability Presence Attractive destination for employers in healthcare, ▪ Growing Private Sector education and technology, amongst others Lower cost of business and living, extensive ▪ Good Alternative to transportation networks and retail amenities San Francisco 8
Sacramento - One of US’ Strongest Real Estate Markets Low overall vacancy and increasing asking rents 1 Demand outpaces supply 1 Historical Net Absorption (US$) (sq ft) Historical Asking Rent and Vacancy Rate 44.0 20.0% 131,793 17.4% 18.0% 41.8 110,116 109,023 42.0 Overall Vacancy Rate Average Asking Rent (US$ psf) 16.0% 13.6% 40.0 14.0% 12.0% 51,533 12.0% 38.0 37.2 36.2 13,480 10.0% 35.7 11.0% 36.0 8.0% 34.2 8.3% 4.7% 6.0% 34.0 2014 2015 2016 2017 2018 3Q2019 4.0% 31.7 32.0 2.0% (55,718) 30.0 0.0% 2014 2015 2016 2017 2018 3Q2019 Net Absorption Average Asking Rent Vacancy Rate Strong competitive micro market underpinned by low vacancy, healthy rent growth, high demand and limited new supply Source: Independent Market Research Report by Cushman & Wakefield (1) Based on Park Tower’s competitive micro market, which comprises 12 properties (including Park Tower) as identified by Cushman & Wakefield to be the most comparable to Park Tower 9
Class A Tower with World Class Amenities Timeless Design Robust Onsite Amenities Designed by the renowned architectural firm Kaplan Including recently renovated fitness centre, locker McLaughlin Diaz and recently renovated magnificent rooms, conference centre, and tenant lounge three-storey atrium lobby Above Market Parking Two parking garage at a above average parking ratio of 2.4/1,000 sq ft in the submarket ~15,000 – 28,000 sq ft of Flexible Floor Plates 10
Situated in the Heart of Sacramento's Downtown Core N LIVE, WORK, PLAY An outstanding combination of recreational, cultural, educational offerings and relatively lower cost of living has resulted in Sacramento attracting residents from neighbouring states. Sacramento’s highly -educated and growing workforce is one of the key factors that have attracted various globally recognised employers to Sacramento. Furthermore, Sacramento is undergoing an entertainment evolution. New entertainment and leisure venues continue to open. One such major venue is Downtown Commons (DOCO), which is a newly developed, mixed-use entertainment and shopping complex with 630,000 sq. ft of retail, including popular eateries, department stores, cinema and gym. With such transportation infrastructure and amenities for its residents, Downtown Sacramento has become a true LIVE-WORK-PLAY Environment. Public Transportation Routes 11
Enhance Asset Diversification Enlarged Portfolio: Cash Rental Income 1 by Market 2 Current Portfolio: Cash Rental Income 1 by Market 2 Sacramento, 10.5% San Francisco Bay Area San Francisco Bay Area (Oakland), Atlanta, 14.3% (Oakland), 9.0% 8.1% Salt Lake City, Salt Lake City, Atlanta, 12.8% 13.0% Washington DC Area 14.6% (Suburban Maryland and Virginia), 13.8% Washington DC Area Denver, (Suburban Maryland 12.1% Denver, and Virginia), Philadelphia, 13.5% 12.3% 8.6% San Antonio, St Louis, Philadelphia, 7.7% 7.4% 9.8% St Louis, Dallas, 7.9% 10.9% San Antonio, 6.6% Dallas, 7.1% New market No Single Market Contributes Expand footprint to a new target market More Than 13.0% of Cash Rental Income (1) For the month of December 2019. Unless otherwise stated, cash rental income (as disclosed in this presentation) refers to rental income and recoveries income excluding straight-line adjustments and free-rent incentives (2) Classified by primary market 12
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